What recession? Gear up for holiday ad spending

Here we go again.

The holiday season is right around the corner, and there's a grinch of a vibe in marketing Whoville. A whopper of a recession is looming, and the word from the C-suite is to get ready to cut marketing staff and slash long-planned media investments. Many advertisers have already started pulling back their snoof, fuzzles, tringlers and trappings.

Have we learned nothing from past recessions? Dozens of studies going back a hundred years have shown in no uncertain terms that cutting ad spending during a recession is just about the last thing a brand should do.

What can you do to buck the trend?

Understand today’s recession

The first step you need to take is to recognize what sets this particular recession apart from previous recessions.

Recessions are an integral part of what economists call the business cycle. In the US, ‘peaks’ and ‘troughs’ in the economy are tracked by the National Bureau of Economic Research, and the current tally stands at close to 50 recessions since the country’s founding days. That’s about one every 5-6 years. Like the rings on a tree stump, you could tell time by counting recessions.

But it’s a big mistake for marketers to whip out the same recession playbook every single time. The external signs—like GDP and unemployment—might look similar, but every recession has different root causes and triggers. The 2020 recession caused by the Covid-19 pandemic lasted barely two months, while the Great Recession in 2007-2009 triggered by the subprime crisis stayed with us for 18 months. The one before that was the dot-com bubble and lasted eight months. No two are alike.

At the heart of today’s recession is record-breaking inflation, and brands need to have their finger on the pulse of the consumer to understand how they’re coping with it in every facet of their lives. Brand allegiances are up for grabs, especially during the holidays when 91% of shoppers are ready to give new brands a try. Tomorrow’s winning brands are those that can “recognize and respond to today’s consumer stressflation,” as NCSolutions Chief Research Officer Leslie Wood put it in a recent interview.

Understand why cutting ad spend is a terrible idea

Marketers are facing a tough fight in the boardroom. Despite recent efforts to develop customer-centric organizations and raise the profile of the marketing function at the table, media budgets often end up on the chopping block in times of crisis.

There’s no question that cutting media expenses, like any cost, can provide some short-term relief to profitability. But when a brand goes dark with its ad spending, it sends a signal to its competitors to double down on their own media investments and fill the void. And research has shown again and again that a dip in share-of-voice results in a loss of market share. In today’s fast-paced environment, that loss can be impossible to recover from. The decision-makers at your company need to understand that short-term relief isn’t worth the long-term cost to your business.

As British researcher Peter Field points out, “pulling all brand advertising during a recession brings a real risk of permanently weakened business performance. It is sensible to debate the tone and nature of brand advertising to recession-hit customers, but not the importance of it.”

Why not let your competitors make that mistake? While they go dark, you’ll have access to more ad inventory, at cheaper rates, and more face time with consumers without all the usual competitive noise.

Spend your media budget more wisely

Let’s get one thing clear: While brands should resist the temptation to cut advertising during a recession, it doesn’t mean that they should leave their original media plans untouched. Far from it, in fact.

Holiday shoppers will shop differently this year: They’re likely to start shopping early to avoid stockouts and higher prices later in the season; overall, they’ll be more price-sensitive, although 55% still say they would pay more for more sustainable products; 18% (37% among Gen-Z adults) are planning to use buy-now-pay-later plans to ease the pain at the cash register; and retail stores have a big card to play this holiday season now that e-commerce adoption is starting to cool off a bit.

How can you spend more wisely and make the most of the opportunities? Tactically, here are three important steps you need to take this holiday season:

1. Get to know your customers - It’s true at any time, but particularly so when conditions are in flux. Who exactly are your best customers? What draws them to your brand in the first place, and where can you reach them most efficiently? Are they on any of the new ad-supported streaming platforms? There’s often a disconnect between what consumers do and what marketers think they do. A recent Kantar study shows that consumers trust ads on Amazon, TikTok and Spotify the most, whereas marketers tend to favor Instagram, Google and YouTube. Before you get started, learn the most effective targeting strategies to avoid disconnecting from your own customers.
2. Get the best audiences for your brand - You’ll learn a lot from your first-party data, especially if you get to know your customers up close. But first-party data can only go so far. To acquire new customers, look-alike (or rather act-alike) audiences are crucial. We developed the Fyllo Data Marketplace and Semasio Contextual Targeting Tools to combine the best audience modeling techniques on the market—from audiences infused with the largest ecosystem of cannabis and CBD purchase data to semantic extension that closes the gap between audience and context targeting—and help you reach and convert your target persona with precision, faster and more efficiently than ever before.
3. Monitor progress every step of the way - While activation and measurement have come a long way over the past few years, many companies are still hampered by outdated adtech systems. But in today's fast-changing environment, it's vital to have the right technology, data, processes and organizational mindset to run quick experiments, measure their impact, and change course before it's too late. Don’t run your holiday campaigns from a cave 10,000 ft up the side of Mount Crumpet.

How can we help you weather the storm this holiday season and win the race against your competitors? Get in touch at sales@hellofyllo.com